U.S. Steel v. Hoge

U.S. Steel Corporation (plaintiff) was the owner of a vein of coal underlying a tract of land in Greene County, Pennsylvania. U.S. Steel’s predecessor in interest acquired the coal rights via a severance deed dated July 23, 1920. The deed provided the grantee, U.S. Steel’s predecessor, “[a]ll the coal . . . underlying that certain tract of land . . . Together with all the rights and privileges necessary and useful in the mining and removal of said coal, including . . . the right of ventilation.” The deed also reserved to the surface owners, Hoge, Cowan, and Murdock (the surface owners) (defendants), “the right to drill and operate through said coal for oil and gas.” At the time the deed was entered into, coalbed gas was considered a poisonous by-product of coal mining that was typically vented into the atmosphere; it was only sporadically seen as a commercially viable product. It was not until years later that coalbed gas became seen as a commercially valuable natural resource. In 1976 and 1977, Mary Cunningham (the gas lessee) (defendant) acquired through a lease the gas and oil rights from the surface owners and, soon after, began to drill wells for the purpose of recovering coalbed gas for commercial use. U.S. Steel brought a quiet-title action against the surface owners and the gas lessee, seeking a declaration that it was entitled to the coalbed gas. The court of common pleas ruled in the surface owners’ and gas lessee’s favor, and that decree was affirmed by the superior court. U.S. Steel appealed.